Digital ecosystems: Enabling same-day delivery

A BizTech Byte

Customer expectations are changing every day in the digital world. Where lengthy shipping times were once the norm, industry disruptors have raised the bar, and now customers expect same-day delivery services without additional shipping costs. In fact, there have been several recent studies to quantify this shift:

• According to a recent Accenture Strategy study, 27 percent of customers who would normally purchase in-store said they would change their sales channel preference from in-store to online if offered free same-day shipping. An additional 17 percent of respondents would change their sales channel preference if offered a free 24-hour return.¹
• Another study by Dotcom Distribution reports that 87 percent of digital buyers use order delivery time as a determining factor when deciding whether to be a returning customer.²

Same-day delivery is now a must and not a want

Many companies are attempting to solve for this same-day delivery conundrum by developing individual supply chain capabilities on their own, and they are struggling with the cost structure. In fact, according to a study conducted by eMarketer, although it is widely accepted that fast and free shipping has become an ecommerce imperative, only 10 percent of CEOs say they are able to make a profit while fulfilling omnichannel demand because of delivery and other supply chain complexities. This is down from 16 percent in 2014.³

For most of these companies, supply chain is not a core competency. Developing the right strategies, tools, processes and infrastructure requires unique skills that are not available in-house. So how will supply chain leaders satisfy customer expectations before they lose more business to the competition?

The solution to this complex problem? A digital ecosystem.

So, what is this digital ecosystem? An ecosystem is the network of cross-industry players who work together to define, build and execute market-creating customer and consumer solutions. An ecosystem is defined by the depth and breadth of potential collaboration among a set of players: Each can deliver a piece of the consumer solution, or contribute a necessary capability. The power of the ecosystem is that no single player need own or operate all components of the solution, and that the value the ecosystem generates is larger than the combined value each of the players could contribute individually.

In Accenture Strategy’s recent research, we found that 84 percent of companies believe that ecosystems are important or critical to their strategy of disruption and 77 percent agree that companies will generate half or more of their revenue from ecosystems in the next five years.⁴

What are some key success factors for innovative same-day delivery solutions?

1. Open Innovation: Include consumers, client, warehouse service providers and courier service providers in collaborative sessions to solve the business problem together. This way, the resulting platform connects consumer demand to logistics service providers to enable same-day delivery at a competitive price point to existing delivery options.
2. Data Analytics: New data analytics technology, such as product and geospatial analysis can help clients identify the products and zip codes most applicable for same-day delivery. By understanding demand and variability statistically, and utilizing a should-cost modeling approach, clients can determine the right same-day delivery go-to-market strategy for a specific business.
3. Ecosystem Partnerships: Delivery density is key to a cost effective same-day delivery offering. For businesses that do not have the delivery density to achieve the requisite minimum per market per driver daily delivery volume, they must utilize ecosystem partnerships with warehouse and/or courier partners to aggregate demand across clients. A same-day delivery ecosystem can enable a faster go-to-market strategy and give business of all sizes the opportunity to compete in this rapidly expanding market. Accenture Strategy piloted such a digital ecosystem with one of our clients in just eight weeks to launch a competitive same day delivery solution.
4. Digital Platform: Businesses will only be able to capture the value associated with same-day delivery if they provide customers with a comprehensive end-to-end digital channel experience. Some must-have required digital capabilities include: same-day eligibility insights—visibility into local inventory levels and a courier’s ability to supply those orders same day; ability to view real-time delivery updates via telematics technology, and providing near-real-time access to delivery information, anytime and anywhere, through cloud and mobility technologies.

The take-away: Same-day delivery is rapidly becoming, if not already is, “table stakes” for the direct-to-consumer fulfillment model. To provide the requisite prowess and scale to delight customers and offer this capability more profitably, companies should take advantage of the new thinking on technology platforms, analytics-driven insights and ecosystem partnerships.

¹ Accenture Strategy, Communications Media & Technology Operations Research, Consumer Insights, 2017

² DotCom Distribution, Driving Customer Loyalty with Fast Delivery and Quality Packaging (2016)

³ eMarketer, Global Retailers Still Haven't Cracked the Code on Their Digital Strategy (2017)

⁴ Accenture Strategy, Cornerstone of Future Growth: Ecosystems, 2018